Review of Maritime Transport

Last Updated: 06 Sep 2020
Essay type: Review
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Sea transport is the backbone of international trade and globalization, carrying more than 80% of the volume of world merchandise trade. In 2007 the volume of international maritime transport increased by 4,8% compared with the 2006 year and reached 8.02 billion tons. For comparison, over the past three decades, average annual growth rate of world sea transport accounted for an estimated 3,1%.

Strong demand for maritime transportation services spur growth in the global economy and international commodity trade. In 2007, the gross domestic product (GDP) of all countries in the world increased by 3,8%, while world merchandise exports increased by 5,5% compared with the previous year.

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Thus, despite rising energy prices and its potential impact on transport costs and trade, and despite increasing global risks and uncertainties such as those associated with a significant rise in prices for petroleum commodities, the global credit crisis, the depreciation of the dollar of the United States, growth in the global economy and trade was still sustainable.

In 2007, was carried more than 8 billion tons of cargo, the historical record. More than 80% of all raw materials and goods were transported by sea in the world.

In 2007, the volume of traffic by sea increased by 4.8% to over 8 billion tons.

By 2008 the world fleet grew by 7.2% and reached a total deadweight of 1.12 billion tons.
However, the initial favorable half of 2008 was replaced by a worldwide crisis and a sharp drop in shipments.

After second half of 2008 the strong demand for bulk carrier by grain traders led to an increase in freight rates in September 2009 year. The situation has been fueled by a slight shortage of ships. Dynamics of the Baltic Freight Index (BFI) in September 2009 for the “Panamax” wore an ambiguous character: in the first half of the month the index has grown, and then gradually began to lose ground.

Last month of the 2010 year does not justify the hopes of ship-owners to recover the freight market for bulk tonnage. The level of the Baltic Freight Index for almost all types of bulk carriers (except “hendysize’’) showed a decrease in the first place, for large vessels. Finally, in anticipation of the Christmas holidays BFI for bulk carriers “Panamax” – by 523 points or 22%.

According to analysis of previous years 2006, 2007, 2008 ,2009, 2010 freight brokers pay attention to their return to a crisis level in December 2008 the ratio of time – dry bulk charter rates “keypsize”and “Panamax. ” Currently it is 50% and means that the deadweight ton bulk carriers such as “Panamax” Charterers costs 4 times more expensive than bulk carriers “keypsize” (twice the rate and approximately the same half DWT). This indicates a strong demand for bulk carrier “Panamax”, which in turn is caused by using them to carry a wider range of commodities (coal, grain, sugar, fertilizer, bauxite, etc.) and also has a smaller excess of the courts type compared with the bulk carriers “keypsize’’. “Executive summary.(Review of Maritime Transport, 2008)”, Review of Maritime Transport, Annual 2008 Issue

‘’Panamax’’ dry bulk market – perfect market

Under the marketing research is meant to collect, analyze range of data needed to solve the problems facing the firm marketing the situation, as well as the formation of a report on progress. Known a lot of instances where large companies are destroyed due to the fact that it is not paid due attention to research on marketing.( Paul Krugman , Robin wells )

Panamax dry bulk market is perfect market firstly because in the market involved many independent firms, which takes their own decision what to produce and in what amount, while monopoly market is the exclusive right to manufacture owned by one person, group of persons or the state. Also Monopolistic firms create entry barriers for new firms, limiting access to sources of raw materials and energy, using high technology, used very big expenses when Panamax (perfect) market is not restricted, possible free access to anyone who wishes to become an entrepreneur. Oligopoly – is the existence of several companies, usually large, on whose shoulders the brunt of industry sales, so Panamax dry bulk market still perfect in that case, because in perfect market the sellers are independent of each other against to oligopoly market system.

In perfect market will not be founded a series of concrete forms which have artificial monopolies such as a cartel, syndicate, trust, concern. Oligopoly is divided in two different parts: price – this artificial churning of commodity prices. It is widely used price discrimination, under certain conditions: the seller of a monopoly, the presence of a strong marketing policy of the firm; inability to resell the goods at the original purchaser. This kind of competition is especially often used in services. This tendency cannot be founded in perfect market as in perfect market the buyers are well informed about the prices. The other part of oligopoly is non-price – it is competition, carried out by means of improving product quality and conditions of sale at that point ‘’Panamax’’ dry bulk market still the perfect market according to that the goods in perfect market are homogeneous so there is no real way for improving quality of bulk cargo and selling conditions. So all previously mentioned types of market are not about Panamax dry bulk market, there is clearly identified that ‘’Panamax’’ dry bulk market is a perfect market. ( KRUGMAN WELLS ) microeconomics).

Bulk carrier “panamax”

Dynamics of the Baltic Freight Index (BFI) in December 2009 was stable for all sizes of dry bulk tonnage. Compared with the beginning of the first months of 2009 year BFI for “Panamax” has decreased by 1.8%. However, if we turn to the beginning of January 2009, dramatic changes are evident freight market conditions that have occurred over the past 12 months. Growth of BFI for the “Panamax” for the period totaled 6.6 times. Compared with just a failure late 2008 – early 2009 Freight market dry bulk actually “reborn from the ashes” and the beginning of 2009 has stabilized at a relatively high level.

When, last month of 2010 as was mentioned before does not justify the hopes of ship-owners to recover the freight market for bulk tonnage, in that case could be identified that first half of 2009 was much pleasant for ship-owners than late 2010.

Dynamics of the Baltic freight index in December 2010:

Type of tonnage01.12.1015.12.1023.12.10
Bulker “Keypsize”286926872379
Bulker “Panamax”238022341857
Bulker “Superhendymaks”155016591517
Bulker “Hendysize”802835834

Source: Clarkson

Dynamics of the Baltic freight index in December 2009:

Type of tonnage01.12.0914.12.0930.12.09
Bulker “Panamax”363535743567
Bulker “Superhendymaks”237624202224
Bulker “Hendysize”114312391159

Source: Clarkson

To analyze the above table does not need to be a doctor of Mathematical Sciences, bremsstrahlung from the table to see that every year the dynamics of Baltic Exchange decrease, if compare the data from first half of 2008 with first half of 2010, can be easily identified the fall of almost 3 times when 2009 was also not rising with the alignment on a 2008 or even 2010.

New building Market

According to Clarkson Research Services, in 2009 compared with 2008 the number of ordered bulk carriers has decreased in 6,5 times, container – by 30 times, universal dry cargo ships – 15 times, Ro-Ro – 44 times, and reefer vessels generally was not ordered. And this despite the fact that contract prices for bulk carriers, according to the same source, as compared with 2008 decreased by 23-36%, and container – by 24-40%. The basis for this decline, as analysts note, decreased by 30-40% on the price of ancillary equipment, as well as reducing the cost of shipbuilding steel.

Number of dry cargo ships ordered by the type of tonnage in 2006-2009.:

According to Chinese sources, 65% of China’s shipbuilders received no new orders in 2009, the worst off were newly emerging in the wake of the shipbuilding boom of 2007-2008, the players. It is estimated that in 2009, China built a total deadweight tonnage of about 40 million tons, up 41% more than in 2008 at the same time, Chinese shipyards in 2009, received orders for vessels with total deadweight of 22.94 million tons, up 61% from a year earlier. Fortunately, Chinese shipyards a great help by the Government of that country’s direct and indirect support measures for domestic shipbuilding.

During the first 11 months of 2010, orders for dry bulk tonnage amounted to 68.4 million dwt, reaching the highest since 1996, except for the shipbuilding boom of 2007/2008., indicator. Almost as many – 68.9 million dwt in the 11 months of 2010 amounted to delivery of new tonnage. As a result, with 22 million dwt (8%) ruptured shipbuilding contracts worldwide portfolio of orders for bulk carrier according to Clarkson’s totaled 279 million dwt, or 52.9% of the existing fleet.

“Second hand” vessel market

There is a high activity of Chinese buyers of used dry bulk carriers, which was dominating this market segment ’’ Panamax’’ dry bulk. Brokers noted buying dry bulk carrier in China with symbolic name INDIA deadweight of 76,620 tons, built in 2005 by a Japanese shipyard Sasebo. The transaction price was $ 36.3 million
In general, during December the price of modern bulk carrier “Panamax” less than 5 years of age have been further strengthened, and the modern “superhendimaks” remained at the same level.

The price level for modern bulk carrier “second hand” in December 2009.:

Type of tonnageYear of vesselDWTPrice, thoundsdant. USD
Start of December2009 y.End of December2009 y.Changes (+) (–)
‘’Panamax’’max 5 y.740003293533424+389
‘’Superhendymaks’’max 5 y.520002728127308+27

Source: Baltic Sale & Purchase Assessment

Considering to the December price dynamics for used bulk carrier, we note that the decrease in the freight market conditions affected the level of prices, led to their downward trend. Most analysts believed that the excess of the formed dry bulk lead to a further fall in prices. But, despite a decrease in prices for used bulk carrier, according to analysts Arctic Securities in 2010 they still remain 20% higher than in early 2009.
The price level for modern bulk carrier “second hand” in December 2010.:

Type of tonnageYear of vesselDWTPrice, thoundsdant. USD
Start of December2010 y.End of December2010 y.Changes (+) (–)
‘’Panamax’’max 5 y.740003849437830– 664
‘’Superhendymaks’’max 5 y.520003231531267– 1048

Source: Baltic Sale & Purchase Assessment


Forecast of the freight market

According to analysts of First Securities with a total deadweight bulk carrier, which will go to scrap in 2011, could reach 12 million tons and revenues of the new tonnage – 20 million tons That is the pressure of excess tonnage in the freight market is retained.

According to experts of international rating agency Moody’s Investors excess of supply over demand in the area of dry bulk traffic will negatively affect the marine industry in the short term, although the overall long-term prospects for the industry over the next decade are more favorable due to expected further growth in demand for raw materials from developing countries. Therefore, Moody’s recommends that the shipping companies involved in transportation of bulk cargo hold more prudent investment policy on orders new fleet. Now, when are launched more new bulk carriers, freight rates remaining highly volatile due to large variations in supply and demand.


  1. “Executive summary.(Review of Maritime Transport, 2008)”, Review of Maritime Transport, Annual 2008 Issue
  2. «Review of Maritime Transport», UNCTAD, 2008 ã,
  3.  Îáçîð ìèðîâîãî ìîðñêîãî ôëîòà îò ÞÍÊÒÀÄ, èíôîðìàöèÿ ñ ñàéòà
  4. Èçäàíèå Fairplay,
  5. Page Reference : null
  6. Stopford
  7. Microeconomics 1
  8. Microekonomiks 2
  9. Clarcson
  10. Baltic Sale & Purchase Assessment
  11. Source: CRS
  12. agency Moody’s Investors
  13. analysts of First Securities
  14. baltic freight index

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Review of Maritime Transport. (2019, Mar 29). Retrieved from

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